Categorized | economy

The Post-Employment Economy, Part 1

Over the past twelve months, I have been giving talks in various and sundry places, like trade groups, conferences, and a couple biz schools here and there on what I call the “post-employment economy.” In many ways, my still-in-flux thoughts about a “post-employment” world is one of the driving principles behind the Shoestring Venture series. The “post-employment economy” is one of those cool, wonkish, pseudo-academic phrases that instantly seem to mean something while provoking hurried responses of, “what the hell do you mean?” After a longish discussion with a fellow author over half a dozen single malt scotches, I decided to start putting together a series of posts about what this means. Understand, this is kind of an academic way of talking about what Shoestring Venture is all about as well as where I think the winners in the next few decades are going to come from.

Well, the first place to start, after sobering up a bit, is to try to nail down just what the hell I mean by “post-employment.” But, after the break, of course.

The place to get all complicated and detailed about the economic history of capitalism over the past two centuries is in some article, not a poor, impoverished blog post limping about on a crutch and crying “God Bless Everyone!” Since, as Polonius says, brevity is the soul of wit, let me be brief:

In terms of creating wealth, the 20th century was an era of “employment.” The growth of the middle class came directly out of ever-increasing wages accrued by being “employed” by managers and owners of businesses. In individual terms, the standard household economy was built on getting a long-term “job.” Long-term employment allowed for the growth of middle-class wealth by converting wages into property through debt, such as mortgages. My father, for instance, worked at the same “job” for my entire childhood until he retired when I was in my mid-20s.

This was only made possible in a non-volatile, slow-innovating economy which allowed capitalists to allocate labor resources over the long-term. Since manufacturing, distribution, and marketing required huge outlays of capital, there was a remarkable stability in growth. In a highly volatile, hyper-innovative economy in which the means of production, distribution, and marketing are relatively inexpensive and available to anyone, the race goes to the fleetest of foot, not the biggest of bulk.

We’ve seen a steady erosion of the American dream as an “employment dream” as more and more jobs (of higher and higher skill levels) move offshore, as companies become “lean,” and as real wages steadily erode. The current recession, in fact, has been preceded by a decade or more of growing underemployment and three decades of rapidly increasing employment volatility. In fact, the current recession is primarily busting the employment dream primarily underemployment rather than layoffs.

This underemployment response by businesses large and small to the recession is, I think, a world-shattering change in the employment model, one virtually uncommented on by economic analysts.

In the place of the American “employment” dream, because of offshoring, outsourcing, and information technology, is a new phenomenon I call the “post-employment” dream. It’s been with us since the beginning of time — or at least since the beginning of wage labor — of becoming a business of one. Individuals can, with a small outlay of money, bring a product to market, bring it directly to the consumer, and advertise it internationally. Large employers can, without a significant outlay of money, realize much of their “worker” needs by outsourcing, offshoring, and contracting. In an economy in which knowledge and skills are changing rapidly (I remember when Flash designers could command $100 per hour as contractors, now they’re a dime a dozen, literally), large employers can get the most current skills and knowledge for not-too-far-behind-the-curve projects. Entrepreneurs get a marketplace, employers get fleet-footedness.

Now, there’s always going to be gents and ladies who get Harvard MBAs, strut on over to Bain Consulting, Goldman Sachs, or Merdle, Melmotte, and Madoff Investors and line their vicuna coats with ill-gotten gains. But for most in the middle class, uncertainty and financial distress will be the order of the day for those who pursue the American dream through employment. The new middle class will be entrepreneurial and leverage their skills, knowledge, portability, ideas, and value to maximize their return from the marketplace. Their lives will be a combination of employment (employment will not go away, of course), contract work, small business, and entrepreneurship in some combination throughout their lives.

That’s what I mean by “post-employment”: a growing economic force of partly or sometimes employed, partly or sometimes contracted, partly or sometimes business owners maximizing their value in terms of skills, knowledge, creativity, and ideas in a highly volatile, highly innovative economy.

The American (or middle class capitalist) dream was always, “If you want to work and are able to work, you deserve wages and stability that would allow you to live in some degree of comfort and safety and build wealth for your children and their children.” The American employment dream was about minimizing risk for relatively moderate gains.

The post-employment dream may look something like this: “If you want to work, learn, and change, then you should get the maximum value from what you introduce into the economy.” The American post-employment dream is about confronting greater risk head-on for greater returns.

More on wages in part two.

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5 Responses to “The Post-Employment Economy, Part 1”

Trackbacks/Pingbacks

  1. [...] my first post about the post-employment economy, I talked in general about the transition between the employment economy of the last few decades [...]

  2. [...] my ongoing series on post-employment, I continue on the theme introduced in the second part, namely the waning of the “employment [...]

  3. [...] a preference for being independent agents. Richard Hooker has an excellent multi-part series defining the post-employment economy over at Shoestring [...]

  4. [...] and as real wages steadily erode,” explains author Richard Hooker, who writes about The Post-Employment Economy. “The current recession, in fact, has been preceded by a decade or more of growing [...]

  5. [...] ‘lean,’ and as real wages steadily erode,” explains author Richard Hooker, who writes about the Post-Employment Economy. “The current recession, in fact, has been preceded by a decade or more of growing [...]


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